Short Term Disability Tips

Group Versus Individual Short Term Disability Coverage

Both group and individual short term disability insurance coverages are positive additions to your package of protection. Here are the pros and cons for group short term disability insurance.

• Pro: Cost. Since premiums are calculated at group rates, the cost of protection is noticeably less than individual short term disability protection.
• Pro: Easier to qualify for coverage. Often no medical information need be submitted to be issued insurance coverage.
• Con: Absence of personalized features. Group coverage seldom allows you to add or modify features of the policy that you feel you should have.

• Pro: Ability to customize. You have the ability to purchase exactly the coverage level you feel you need, unaffected by the coverage or financial imitations of an employer's or association's budget or desire.
• Pro: Definition of disability. Instead of being required to accept “any occupation” disability definitions (you're no longer disabled if you can perform the duties of any gainful occupation), you can add “own occupation” coverage (you're eligible for continuing benefits until you can perform the duties of your specialty). Medical and other professionals should strongly consider this provision along with some other options that may be available.
• Con: Health issues could pose a problem. Unlike group coverage, you'll probably need to have a physical exam conducted by a health professional to determine your current medical condition.
• Con: Higher premium cost. Since you do not enjoy the benefit of a group "risk pool", your premiums will often be higher than with group short term disability insurance programs. However, your level of protection will typically be better.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

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How Pre-Existing Medical Conditions Affect Your Application for Short and Long Term Disability Insurance

Medical pre-existing health conditions are normally considered when applying for both short and long term disability insurance. There are some variations in the results of having one or more pre-existing medical conditions, however. Much depends on the conditions, insurance company underwriting, and the coverage for which you have applied.

For instance, there are medical conditions that may or may not be serious reasons to offer “rated” coverage (protection at higher rates than for perfect health applicants) or to decline to issue insurance. There may be chronic health issues, prior injuries or illnesses that, while pre-existing, do not project to be a future problem or cause of disability. Certain pre-existing conditions may project a higher risk of short term disability, but not long term disability. Along with these “good news” potential results, there are also pre-existing medical conditions that carry a high risk of future reoccurrence, which may cause insurers to deny coverage at any price. Finally, look for a pre-existing condition “exclusionary period” provision in your policy. If this language exists, you may be denied coverage for only this period of time, possibly six months to one year. After this period, even if your pre-existing health issue rears its ugly head, you may still qualify for benefits.

As a precaution, be very careful about the non-disclosure of pre-existing medical conditions as benefits could be affected should these issues be revealed during a claim filing process. There is often insurance contract language that relieves the insurer from paying a claim resulting from an undisclosed pre-existing serious health issue, particularly if the non-disclosure was an intentional act. Some insurance companies will merely return previously paid premiums and "call it even".

Should you be covered in a group short term disability contract, check the language of your certificate or the master policy. You want to be aware of any pre-existing condition escape clauses that the insurer could invoke to deny coverage should you need it. The most important factor in short term or long term disability insurance coverage: Having benefits available should you need them. This is a strong argument for considering individual coverage since you can build your insurance protection with your security in mind.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

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When You Should Consider Short Term Disability Coverage

Your decision to consider short term disability coverage to complement your long term disability insurance depends on a few factors. These considerations include -

• How long is the elimination (waiting) period in your long term disability coverage? Waiting periods in long term disability policies can range from 90 to 180 days or longer. What is your contingency plan for the interim period?
• Do you have some form of short term disability insurance from your employer? What level of protection does it provide for you now?
• How is your overall health and medical history? Do you have a propensity to incur injury or illness? Or, are you a workout warrior and in great shape?
• Are you self-employed? If your income really depends on you more than anyone else in your firm, you should consider having the absolute best disability income protection available?

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

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Comparing the Income Replacement Feature in Short Term Disability (STD) to the Benefits in a Long Term Disability (LTD) Policy

Income benefits may or may not be comparable in short term disability when compared with long term disability insurance. Typically the best situation for you is that your short term disability income replicates your benefits from a long term disability policy. There are sometimes differences in benefits for the following reasons.

Much of the short term disability coverage provided is offered by employers and federal or state government. Long term disability coverage is often secured by individuals. The choices of income benefit levels can be quite different.

For example, your employer-sponsored, state, or federal short term disability insurance may provide income replacement up to 60% of your regular monthly compensation. You may purchase individual long term disability insurance that provides benefits at 70% to 75% of your regular income. This is not necessarily a bad situation, but it does create a benefit mismatch.

Short term disability programs sometimes provide lower income benefits because much of this coverage is provided by employer-sponsored group plans and/or government backed programs. Because of the more universal nature of their coverage, they must concentrate on the majority of the group, not the individual. If you purchase individual short term disability coverage, you'll have the opportunity to enhance your benefits, which might be an important factor for you.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

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Are You Eligible for Short Term Disability (STD) Coverage?

Eligibility for short term disability insurance coverage is typically based on a few factors. Here is a brief summary of common eligibility requirements.

Employer-sponsored group short term disability programs:

• Have you met the “service-wait” period? Most group STD contracts have a specified time period for which you've been employed by the policy owner (your company) before you're eligible for coverage. Typically this time period may be from 90 to 365 days of continued employment. These waiting periods are often included for two reasons. The employer and the insurance company do not want the expense of completing forms, issuing insurance certificates, etc. to a brand new employee who may or may not survive the normal probationary period of full time employment. Second, should you have undisclosed medical problems, neither your employer (who pays most or all premiums) nor the insurer want to face immediate covered claims that must be paid.
• Do you have pre-existing conditions that generate specific “exclusions” from coverage or prohibit any coverage at all? No insurance company wants to be responsible for benefit payments that result from negative medical conditions that existed prior to their issuance of coverage if this information is available prior to issuing protection.

• Have you completed the association membership waiting period? Similar to the employer-sponsored coverage service time provision, this requirement typically applies to professional associations you might join. Like your employer, associations and insurers want to avoid anyone joining the group simply for short term disability insurance protection the new member believes may be necessary in a short period of time because of their personal medical history.

• Do you meet the underwriting standards of the company from which you desire insurance coverage? Is your medical history acceptable to allow insurance coverage to be issued? Beyond medical issues, your occupation, profession, and employment history may also be considered.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

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How to Find Individual Short Term Disability Insurance

Individual short term disability insurance is available should you need it. First, determine your need in light of the following information. Five states (RI, NY, NJ, CA, HI) and the Commonwealth of Puerto Rico offer Temporary Disability Insurance (TDI) to all employees working in their jurisdictions. Workers Compensation insurance is mandatory throughout the U.S. to provide benefits for employees injured at their workplace. Many companies offer employer-paid short term disability insurance which covers their entire employee group.

If you are covered by one or more of these programs, estimate your benefit levels and decide if they are sufficient to maintain your household should you suffer a short term disability. For decision purposes, you could estimate a disability lasting up to 26 weeks or make a more detailed outline by inserting the actual benefit periods of your current coverage.

Should you be a highly compensated professional, executive, or self-employed person, you may want to consider enhancing your short term disability coverage. Using well-respected websites, like ProtectYourIncome.com, you can gather information and get quotes for coverage. It is wise to “match” short and long term disability insurance to adequately protect yourself, your family, and your future earnings. Disability statistics indicate a strong likelihood of disability lasting in excess of two years for a significant percentage of the population. Short term disability coverage would certainly help, but a matching long term disability policy should help prevent financial disaster from befalling your household.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

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How “Long” Is Short Term Disability?

There is a simple answer to the question, “How long is short term disability?” from an insurance perspective. Benefits in the majority of short term insurance contracts are payable to a maximum of one year. Many short term programs last considerably less, some for just 13 through 26 weeks. These programs are not typically designed to serve the function or have the options of long term disability coverage.

Short term disability insurance is sometimes called “cash sickness” coverage or temporary disability insurance (TDI) because it protects people from a typical injury or illness that prevents them from performing their occupations for a short period of time, usually measured in months. This coverage was not created to help you in more serious situations.

People covered by employer-paid short term disability insurance and/or government programs (temporary disability insurance in five states and Puerto Rico or Workers Compensation coverage in all states) should consider matching this insurance with long term protection. Should you suffer an injury or illness that prevents you from working for years instead of months, the difference between long term and short term disability insurance will be graphically displayed with unwelcome results.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

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The Difference Between Long Term and Short Term Disability

Short term and long term disability insurance have similar purposes but are designed to function a bit differently. Here are some of the primary differences.

• Elimination (waiting) periods. Waiting periods for short term disability coverage typically range from seven to twenty-one days. Even a short long term disability elimination period can be as long as 45 to 60 days. Some long term disability policies can specify waiting periods of 90 to 180 days.
• Length of benefits. Most short term disability insurance plans limit your benefit period to one year or less. Long term coverage has a wider range of choices, typically from two years through age 65. Some insurers even offer lifetime benefit periods.
• Government insurance. Five states in the U.S. (RI, NY, NJ, CA, HI) and Puerto Rico offer employer-mandated temporary disability insurance (TDI), sometimes called “cash sickness” coverage, for employees disabled in non-workplace situations for the short term. Workers Compensation insurance is also required in all states to provide benefits for employees injured while at their workplace. These programs are designed to function as short term disability insurance. The Social Security Disability Income (SSDI) program was created to provide long term disability benefits to all citizens who have accumulated sufficient “credits”. You earn credits for all jobs you've held that were covered by the Social Security retirement system.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

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